Mastercard · 10-Q · Item 2 MD&A

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s discussion and analysis of financial condition and results of operations

The following supplements management's discussion and analysis of Mastercard Incorporated for the year ended December 31, 2025 as contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 11, 2026 (“2025 Form 10-K”). It also should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (together, “Mastercard” or the “Company”), included elsewhere in this Report.

Financial Results Overview

The following table provides a summary of our key GAAP operating results, as reported:

Three Months Ended June 30,

Increase/(Decrease)

Six Months Ended June 30,

Increase/(Decrease)

(in millions, except percentages and per share data)

Net revenue

$

$

$

$

Operating expenses

$

$

$

$

Operating income

$

$

$

$

Operating margin

%

%

%

%

Income tax expense

$

$

$

$

Effective income tax rate

%

%

%

%

Net income

$

$

$

$

Diluted earnings per share

$

$

$

$

Diluted weighted-average shares outstanding

(3)%

(3)%

Note: Table may not sum due to rounding.

The following table provides a summary of our key non-GAAP operating results1, adjusted to exclude the impact of gains and losses on our equity investments, Special Items (which represent litigation judgments and settlements and certain one-time items) and the related tax impacts on our non-GAAP adjustments. In addition, we have presented growth rates, adjusted for the impact of currency:

Three Months Ended June 30,

Increase/(Decrease)

Six Months Ended June 30,

Increase/(Decrease)

As adjusted

Currency-neutral

As adjusted

Currency-neutral

(in millions, except percentages and per share data)

Net revenue

$

$

$

$

Adjusted operating expenses

$

$

$

$

9%

Adjusted operating margin

%

%

%

%

Adjusted effective income tax rate

%

%

%

%

Adjusted net income

$

$

$

$

Adjusted diluted earnings per share

$

$

$

$

Note: Table may not sum due to rounding.

1 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Key highlights for the three and six months ended June 30, 2026, versus the comparable periods in 2025:

Net revenue

GAAP

Non-GAAP

(currency-neutral)

Both the as-reported and currency-neutral net revenue increases were attributable to growth in our payment network and value-added services and solutions.

GAAP

Non-GAAP

(currency-neutral)

Both the as-reported and currency-neutral net revenue increases were attributable to growth in our payment network and value-added services and solutions.

Operating expenses

Adjusted

operating expenses

GAAP

Non-GAAP

(currency-neutral)

Both the as-reported and as-adjusted operating expenses increases were primarily due to higher general and administrative expenses.

GAAP

Non-GAAP

(currency-neutral)

The as-reported operating expenses increase was primarily due to higher general and administrative expenses (which included a restructuring charge in the first quarter of 2026), partially offset by lower litigation provisions. The as-adjusted operating expense increase was primarily due to higher general and administrative expenses.

up 9%

Effective income

tax rate

Adjusted effective

income tax rate

Both the as-reported and as-adjusted income tax rates were lower versus the comparable period in 2025 due to partially offsetting tax impacts in 2026, including discrete tax benefits in the periods.

GAAP

Non-GAAP

Both the as-reported and as-adjusted income tax rates were lower versus the comparable period in 2025 due to partially offsetting tax impacts in 2026, including discrete tax benefits in the periods.

GAAP

Non-GAAP

Other financial highlights for the six months ended June 30, 2026 were as follows:

•We generated net cash flows from operations of $6.8 billion.

•T1We repurchased 17.6 million shares of our common stock for $8.9 billion and paid dividends of $1.5 billion.

•We completed a debt offering in June 2026 for an aggregate principal amount of $5.0 billion.

•We issued commercial paper and at June 30, 2026 had $0.7 billion outstanding.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-GAAP Financial Information

Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). As described more fully below, our non-GAAP financial measures exclude (where applicable) the impact of gains and losses on our equity investments, which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition, as well as the related tax impacts. Our non-GAAP financial measures also exclude (where applicable) the impact of special items, which represent litigation judgments and settlements and/or certain one-time items, as well as the related tax impacts (“Special Items”).

We also present growth rates adjusted for the impact of currency, which is a non-GAAP financial measure. We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation, among other things. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items. Operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share, each as adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, should not be relied upon as substitutes for measures calculated in accordance with GAAP.

Our non-GAAP financial measures for the comparable periods exclude the impact of the following:

Gains and Losses on Equity Investments

•In the three and six months ended June 30, 2026, we recorded net losses of $2 million ($5 million after tax, or $0.01 per diluted share) and $68 million ($69 million after tax, or $0.08 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.

•In the three and six months ended June 30, 2025, we recorded net gains of $4 million ($5 million after tax, or $0.01 per diluted share) and net losses of $25 million ($19 million after tax, or $0.02 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.

Special Items

Litigation provisions

•T2In the three and six months ended June 30, 2026, we recorded charges of $82 million ($59 million after tax, or $0.07 per diluted share), which includes a legal provision associated with the ATM non-discrimination rule surcharge complaints, a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and provisions associated with various other legal matters.

•In the three months ended June 30, 2025, we recorded charges of $96 million ($73 million after tax, or $0.08 per diluted share), primarily due to a legal provision associated with the ATM non-discrimination rule surcharge complaints. In the six months ended June 30, 2025, we recorded charges of $247 million ($174 million after tax, or $0.19 per diluted share), primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and a legal provision associated with the ATM non-discrimination rule surcharge complaints.

Restructuring charge

•T3In the six months ended June 30, 2026, we recorded a restructuring charge of $202 million ($158 million after tax, or $0.18 per diluted share). The savings from the restructuring action are primarily intended to enable reinvestment to support the realization of our long-term growth opportunities.

See Note 5 (Investments) and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion related to certain of the items discussed above.

Currency-neutral Growth Rates

T4Currency-neutral growth rates are non-GAAP financial measures and are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on operating results. The impact of currency translation represents the effect of translating operating results where the functional currency is different from our U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from our foreign exchange derivative contracts designated as cash flow hedging instruments (specifically those that manage the impact of foreign currency variability on anticipated revenues and expenses) is recognized in the respective financial statement line item on the consolidated statements of operations when the underlying forecasted transactions impact earnings.

The translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments as specified in the preceding paragraph (collectively, the “Currency Impact”) has been excluded from our currency-neutral growth rates and has been identified in the “Non-GAAP Reconciliations” tables below and our “Drivers of Change” tables.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

See “Foreign Currency - Currency Impact” for further information on our currency impacts and “Financial Results - Net Revenue” and “Financial Results - Operating Expenses” for our "Drivers of Change” tables.

Non-GAAP Reconciliations

The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective adjusted non-GAAP financial measures:

Operating expenses

Operating margin

Other income (expense)

Effective income tax rate

Net income

Diluted earnings per share

($ in millions, except per share data)

Reported - GAAP

$

%

$

%

$

$

(Gains) losses on equity investments

**

**

2

%

5

Litigation provisions

%

**

%

Adjusted - Non-GAAP

$

%

$

%

$

$

Operating expenses

Operating margin

Other income (expense)

Effective income tax rate

Net income

Diluted earnings per share

($ in millions, except per share data)

Reported - GAAP

$

%

$

%

$

$

(Gains) losses on equity investments

**

**

%

Litigation provisions

%

**

%

Restructuring charge

%

**

—

%

Adjusted - Non-GAAP

$

%

$

%

$

$

Operating expenses

Operating margin

Other income (expense)

Effective income tax rate

Net income

Diluted earnings per share

($ in millions, except per share data)

Reported - GAAP

$

%

$

%

$

$

(Gains) losses on equity investments

**

**

(4)

%

(5)

Litigation provisions

%

**

%

Adjusted - Non-GAAP

$

%

$

%

$

$

Operating expenses

Operating margin

Other income (expense)

Effective income tax rate

Net income

Diluted earnings per share

($ in millions, except per share data)

Reported - GAAP

$

%

$

%

$

$

(Gains) losses on equity investments

**

**

—

%

Litigation provisions

%

**

%

Adjusted - Non-GAAP

$

%

$

%

$

$

Note: Tables may not sum due to rounding.

** Not applicable.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables represent the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:

Three Months Ended June 30, 2026 as compared to the Three Months Ended June 30, 2025

Increase/(Decrease)

Operating expenses

Operating margin

Effective income tax rate

Net income

Diluted earnings per share

Reported - GAAP

(Gains) losses on equity investments

**

**

—%

—%

Litigation provisions

1%

(1)%

(1)%

Adjusted - Non-GAAP

Currency Impact

(1)%

(3)%

(3)%

Adjusted - Non-GAAP - currency-neutral

Six Months Ended June 30, 2026 as compared to the Six Months Ended June 30, 2025

Increase/(Decrease)

Operating expenses

Operating margin

Effective income tax rate

Net income

Diluted earnings per share

Reported - GAAP

(Gains) losses on equity investments

**

**

1%

1%

Litigation provisions

3%

(2)%

(2)%

Restructuring charge

(3)%

— ppt

2%

2%

Adjusted - Non-GAAP

Currency Impact

(2)%

(4)%

(4)%

Adjusted - Non-GAAP - currency-neutral

9%

Note: Tables may not sum due to rounding.

** Not applicable.

Key Metrics and Drivers

In addition to the financial measures described above in “Financial Results Overview”, we review the following metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. We believe that the key metrics presented facilitate an understanding of our operating and financial performance and provide a meaningful comparison of our results between periods.

Operating Margin measures how much profit we make on each dollar of sales after our operating costs but before other income (expense) and income tax expense. Operating margin is calculated by dividing our operating income by net revenue.

Key Drivers

Gross Dollar Volume (“GDV”) measures dollar volume of activity, including both domestic and cross-border volume, on cards carrying our brands during the period, on a local currency basis and U.S. dollar-converted basis. GDV represents purchase volume plus cash volume; “purchase volume” means the aggregate dollar amount of purchases made with Mastercard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements and includes the impact of balance transfers and convenience checks obtained with Mastercard-branded cards for the relevant period. Information denominated in U.S. dollars relating to GDV is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which our volumes are reported.

These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. We report period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of currencies against the U.S. dollar in calculating such rates of change. Data used in the calculation of GDV is provided by our customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or our customers.

Cross-border Volume Growth measures the growth of cross-border dollar volume during the period, on a local currency basis and U.S. dollar-converted basis, for all Mastercard-branded programs.

Switched Transactions measures the number of transactions switched by Mastercard, which is defined as the number of transactions initiated and switched through our network during the period.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables provide a summary of the growth trends in our key drivers:

Three Months Ended June 30,

Six Months Ended June 30,

Increase/(Decrease)

Increase/(Decrease)

USD

Local

USD

Local

USD

Local

USD

Local

Mastercard-branded GDV growth 1

9%

8%

9%

9%

8%

8%

9%

United States

6%

6%

6%

6%

5%

5%

7%

7%

Worldwide less United States

9%

9%

8%

Cross-border volume growth 1

Three Months Ended June 30,

Six Months Ended June 30,

Increase/(Decrease)

Increase/(Decrease)

Switched transactions growth

9%

9%

Note: Effective 2026, our key drivers above include Venezuela cross-border activity, as applicable.

1 Excludes volume generated by Maestro and Cirrus cards.

Key Metrics related to the Payment Network

Assessments represent agreed-upon standard pricing provided to our customers based on various forms of payment-related activity. Assessments are used internally by management to monitor operating performance as it allows for comparability and provides visibility into cardholder trends. Assessments do not represent our net revenue.

The following provides additional information on our key metrics related to the payment network:

•Domestic assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are the same. These assessments are primarily driven by the domestic dollar volume of activity (e.g., domestic purchase volume, domestic cash volume) or the number of cards issued.

•Cross-border assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are different. These assessments are primarily driven by the cross-border dollar volume of activity (e.g., cross-border purchase volume, cross-border cash volume).

•Transaction processing assessments are charges primarily driven by the number of switched transactions on our payment network. Switching activities include:

◦Authorization, the process by which a transaction is routed to the issuer for approval

◦Clearing, the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction

◦Settlement, which facilitates the determination and exchange of funds between parties

These assessments can also include connectivity services and network access, which are based on the volume of data transmitted and the number of authorization and settlement messages.

•Other network assessments are charges for licensing, implementation and other franchise fees.

The following table provides a summary of our key metrics related to the payment network:

Three Months Ended June 30,

Increase/(Decrease)

Six Months Ended June 30,

Increase/(Decrease)

As reported

Currency-neutral

As reported

Currency-neutral

($ in millions)

Domestic assessments

$

$

$

$

8%

Cross-border assessments

Transaction processing assessments

Other network assessments

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Foreign Currency

Currency Impact

Our primary functional currencies are the U.S. dollar, euro, British pound and the Brazilian real. Our overall operating results are impacted by currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency.

Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of GDV, which is used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. GDV is calculated based on local currency spending volume converted to U.S. dollars and euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar and euro versus local currencies.

For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The transactional currency impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. For the three and six months ended June 30, 2026, GDV on a U.S. dollar-converted basis increased 9% and 10%, respectively, while GDV on a local currency basis increased 8% for each of the periods, versus the comparable periods in 2025.

Further, the impact from transactional currency occurs in our key metrics related to transaction processing assessments and other network assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.

To manage the impact of foreign currency variability on anticipated revenues and expenses, we may enter into foreign exchange derivative contracts and designate such derivatives as hedging instruments in a cash flow hedging relationship as discussed further in Note 16 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.

Foreign Exchange Activity

We incur foreign currency gains and losses from remeasuring monetary assets and liabilities that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statements of operations. The impact of this foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.

Our foreign exchange risk management activities are discussed further in Note 16 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.

Financial Results

Net Revenue

The components of net revenue were as follows:

Three Months Ended June 30,

Increase/(Decrease)

Six Months Ended June 30,

Increase/(Decrease)

($ in millions)

Payment network

$

$

$

$

Value-added services and solutions

Total net revenue

$

$

$

$

For the three months ended June 30, 2026:

T5Net revenue increased 14%, or 12% on a currency-neutral basis, versus the comparable period in 2025. The increase in net revenue was attributable to growth in both our payment network and value-added services and solutions.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net revenue from our payment network increased 10%, or 8% on a currency-neutral basis, versus the comparable period in 2025. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting growth trends across all of our key drivers. Net revenue from our payment network included $5,997 million of rebates and incentives provided to customers, which increased 22%, or 20% on a currency-neutral basis, versus the comparable period in 2025, primarily due to an increase in our key drivers as well as new and renewed deals.

T6Net revenue from our value-added services and solutions increased 20%, or 18% on a currency-neutral basis, versus the comparable period in 2025. The increase was driven primarily by (1) growth in our underlying key drivers, (2) our security solutions, consumer acquisition and engagement services, digital and authentication solutions and business and market insights and (3) pricing.

Net revenue increased 15%, or 12% on a currency-neutral basis, versus the comparable period in 2025. The increase in net revenue was attributable to growth in both our payment network and value-added services and solutions.

Net revenue from our payment network increased 11%, or 8% on a currency-neutral basis, versus the comparable period in 2025. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting growth trends across all of our key drivers. Net revenue from our payment network included $11,636 million of rebates and incentives provided to customers, which increased 22%, or 19% on a currency-neutral basis, versus the comparable period in 2025, primarily due to an increase in our key drivers as well as new and renewed deals.

Net revenue from our value-added services and solutions increased 21%, or 18% on a currency-neutral basis, versus the comparable period in 2025. The increase was driven primarily by (1) growth in our underlying key drivers, (2) our security solutions, digital and authentication solutions, consumer acquisition and engagement services and business and market insights and (3) pricing.

See Note 3 (Revenue) to the consolidated financial statements included in Part II, Item 8 of our 2025 Form 10-K for further discussion of our revenue recognition policies.

Drivers of Change

The following tables summarize the drivers of change in net revenue:

Increase/(Decrease)

Operational

Acquisitions and Dispositions 1

Currency Impact 2

Total

Payment network

8

%

**

2

%

%

Value-added services and solutions

%

—

%

2

%

%

Net revenue

%

—

%

2

%

%

Increase/(Decrease)

Operational

Acquisitions and Dispositions 1

Currency Impact 2

Total

Payment network

8

%

**

3

%

%

Value-added services and solutions

%

—

%

3

%

%

Net revenue

%

—

%

3

%

%

Note: Tables may not sum due to rounding.

** Not applicable.

1Represents the impact of acquisitions and dispositions completed during 2026 and 2025.

2Includes the translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments. See “Non-GAAP Financial Information - Currency-neutral Growth Rates” for further information on our currency impact non-GAAP adjustment.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating Expenses

For the three months ended June 30, 2026, operating expenses increased 10% versus the comparable period in 2025. Adjusted operating expenses increased 11%, or 10% on a currency-neutral basis, versus the comparable period in 2025.

For the six months ended June 30, 2026, operating expenses increased 11% versus the comparable period in 2025. Adjusted operating expenses increased 11%, or 9% on a currency-neutral basis, versus the comparable period in 2025.

The components of operating expenses were as follows:

Three Months Ended June 30,

Increase/ (Decrease)

Six Months Ended June 30,

Increase/ (Decrease)

($ in millions)

General and administrative

$

$

$

$

Advertising and marketing

2%

1%

Depreciation and amortization

9%

Provision for litigation

Total operating expenses

Special Items 1

Adjusted total operating expenses 1

$

$

$

$

Note: Table may not sum due to rounding.

1 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

Drivers of Change

The following tables summarize the drivers of change in operating expenses:

Increase/(Decrease)

Operational

Acquisitions and Dispositions 1

Currency Impact 2, 3

Special

Items 3

Total

General and administrative

(1)%

1%

**

Advertising and marketing

1%

—%

1%

**

2%

Depreciation and amortization

—%

—%

**

Provision for litigation

**

**

**

Total operating expenses

(1)%

1%

(1)%

Increase/(Decrease)

Operational

Acquisitions and Dispositions 1

Currency Impact 2, 3

Special

Items 3

Total

General and administrative

(1)%

2%

4%

Advertising and marketing

(1)%

—%

2%

**

1%

Depreciation and amortization

8%

—%

1%

**

9%

Provision for litigation

**

**

**

Total operating expenses

—%

2%

—%

Note: Tables may not sum due to rounding.

** Not applicable.

1Represents the impact of acquisitions and dispositions completed during 2026 and 2025.

2Represents the translational and transactional impact of currency.

3See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General and Administrative

For the three months ended June 30, 2026, general and administrative expenses increased 11%, on both an as-reported and currency-neutral basis, versus the comparable period in 2025, primarily due to higher personnel and data processing costs to support the continued investment in our strategic initiatives across payment network and value-added services and solutions, as well as fulfillment costs to deliver marketing services to our customers.

For the six months ended June 30, 2026, general and administrative expenses increased 16%, or 14% on a currency-neutral basis, versus the comparable period in 2025, which included a 4 percentage point increase from a restructuring charge of $202 million. The remaining increase was primarily due to higher personnel and data processing costs to support the continued investment in our strategic initiatives across payment network and value-added services and solutions, fulfillment costs to deliver marketing services to our customers, as well as balance sheet remeasurement losses primarily due to unfavorable foreign exchange activity.

The components of general and administrative expenses were as follows:

Three Months Ended June 30,

Increase/ (Decrease)

Six Months Ended June 30,

Increase/(Decrease)

($ in millions)

Personnel 1

$

$

5%

$

$

Professional fees

Data processing and telecommunications

Foreign exchange activity 2

**

Other

Total general and administrative expenses

$

$

$

$

** Not meaningful.

1For the six months ended June 30, 2026, total general and administrative expenses includes a restructuring charge of $202 million. See “Non-GAAP Financial Information” for further information.

2Foreign exchange activity includes the impact of remeasurement of assets and liabilities denominated in foreign currencies net of the impact of gains and losses on foreign exchange derivative contracts. See Note 16 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1 for further discussion.

Advertising and Marketing

For the three months ended June 30, 2026, advertising and marketing expenses increased 2%, or 1% on a currency-neutral basis, versus the comparable period in 2025.

For the six months ended June 30, 2026, advertising and marketing expenses increased 1%, versus the comparable period in 2025. On a currency-neutral basis, advertising and marketing expenses decreased 1%, versus the comparable period in 2025.

Depreciation and Amortization

For the three months ended June 30, 2026, depreciation and amortization expenses increased 10%, on both an as-reported and currency-neutral basis, versus the comparable period in 2025. The increase was primarily due to higher capitalized software amortization, which is in line with the increase in capitalized software driven by the continued growth of our business.

For the six months ended June 30, 2026, depreciation and amortization expenses increased 9%, or 8% on a currency-neutral basis, versus the comparable period in 2025. The increase was primarily due to higher capitalized software amortization, which is in line with the increase in capitalized software driven by the continued growth of our business.

Provision for Litigation

For the three and six months ended June 30, 2026, we recorded charges of $82 million, which includes a legal provision associated with the ATM non-discrimination rule surcharge complaints, a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and provisions associated with various other legal matters. See “Non-GAAP Financial Information” in this section and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Other Income (Expense)

The components of total other income (expense) were as follows:

Three Months Ended June 30,

Favorable/ (Unfavorable)

Six Months Ended June 30,

Favorable/(Unfavorable)

(in millions)

Investment income

$

$

$

$

$

$

Gains (losses) on equity investments, net

(2)

4

(6)

Interest expense

Other income (expense), net 1

Total other income (expense)

4

(Gains) losses on equity investments, net 2

2

(4)

6

Adjusted total other income (expense) 2

$

$

$

9

$

$

$

Note: Table may not sum due to rounding.

1Other income (expense), net increased in the three and six months ended June 30, 2026, versus the comparable period in 2025, primarily driven by government grants.

2See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

Income Taxes

The effective income tax rates for the three months ended June 30, 2026 and 2025 were 20.0% and 20.8%, respectively. The adjusted effective income tax rates for the three months ended June 30, 2026 and 2025 were 20.0% and 20.9%, respectively. The effective income tax rates for the six months ended June 30, 2026 and 2025 were 19.7% and 19.8%, respectively. The adjusted effective income tax rates for the six months ended June 30, 2026 and 2025 were 19.7% and 20.1%, respectively. Both the as-reported and as-adjusted effective income tax rates for the three and six months ended June 30, 2026 were lower versus the comparable periods in 2025 due to partially offsetting tax impacts in 2026, including discrete tax benefits in the periods.

Liquidity and Capital Resources

We rely on existing liquidity (our cash, cash equivalents and investments), cash generated from operations and access to capital to fund our global operations, credit and settlement exposure, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:

(in billions)

Cash, cash equivalents and investments 1

$

$

Available under the revolving credit facility 2

1 Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents and restricted security deposits held for customers at June 30, 2026 and December 31, 2025 of $2.7 billion.

2 Represents amounts remaining available under our committed unsecured $8 billion revolving credit facility (the “Credit Facility”), which has been reduced by commercial paper outstanding at June 30, 2026. The Credit Facility supports our commercial paper program and borrowings under our commercial paper program and the Credit Facility can total up to $8 billion. At June 30, 2026 and December 31, 2025, we had no borrowings under the Credit Facility.

We believe that our existing liquidity, our cash flow generating capabilities and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations, which include litigation provisions and credit and settlement exposure.

Our liquidity and access to capital could be negatively impacted by global credit market conditions. We guarantee the settlement of many of the transactions between our customers. Historically, payments under these guarantees have not been significant; however, historical trends may not be indicative of potential future losses. The risk of loss on these guarantees is specific to individual customers, but may also be driven by regional or global economic and market conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 15 (Settlement and Other Risk Management) to the consolidated financial statements in Part I, Item 1 for a description of these guarantees.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors of our 2025 Form 10-K and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements in Part I, Item 1 of this Report.

Cash Flows

The table below shows a summary of the cash flows from operating, investing and financing activities:

Six Months Ended June 30,

(in millions)

Net cash provided by operating activities

$

$

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by operating activities decreased $211 million for the six months ended June 30, 2026, versus the comparable period in 2025, primarily due to higher net income after adjusting for non-cash items, more than offset by higher customer incentive payments and cash paid for litigation settlements.

Net cash used in investing activities increased $312 million for the six months ended June 30, 2026, versus the comparable period in 2025, primarily due to higher purchases of property and equipment.

Net cash used in financing activities decreased $953 million for the six months ended June 30, 2026, versus the comparable period in 2025, primarily due to higher cash proceeds received from debt issuances and lower repayments of debt in the current year, partially offset by higher cash paid for repurchases of our Class A common stock and dividends.

Debt and Credit Availability

In June 2026, we issued $5.000 billion principal amount of notes (the “2026 USD Notes”). The net proceeds from the issuance of the 2026 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $4.978 billion.

Our total debt outstanding at June 30, 2026 and December 31, 2025 was $24.6 billion and $19.0 billion, respectively. At June 30, 2026, $2.5 billion of our total debt outstanding is payable within 12 months.

We have a commercial paper program (the “Commercial Paper Program”), under which we are authorized to issue up to $8 billion in outstanding notes, with maturities up to 397 days from the date of issuance. In conjunction with the Commercial Paper Program, we have a committed unsecured $8 billion revolving credit facility (the “Credit Facility”) that was amended and extended in 2025 and now expires in November 2030.

Borrowings under the Commercial Paper Program and the Credit Facility, which may total up to $8 billion, are to be used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by our customers. In addition, we may borrow and repay amounts under these facilities for business continuity purposes. At June 30, 2026, we had $710 million of commercial paper outstanding, with a weighted-average interest rate of 3.84%. At June 30, 2026, we had no borrowings under the Credit Facility. At December 31, 2025, we had no borrowings under the Commercial Paper Program or Credit Facility. The Commercial Paper Program is supported by the Credit Facility.

See Note 9 (Debt) to the consolidated financial statements included in Part I, Item 1 and Note 13 (Debt) to the consolidated financial statements included in Part II, Item 8 of our 2025 Form 10-K for further discussion on our debt, the Commercial Paper Program and the Credit Facility.

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Dividends and Share Repurchases

We have historically paid quarterly dividends on our outstanding Class A common stock and Class B common stock. Subject to legally available funds, we intend to continue to pay a quarterly cash dividend. The declaration and payment of future dividends is at the sole discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, available cash and current and anticipated cash needs.

The following table summarizes the dividends declared by our Board of Directors on our outstanding Class A common stock and Class B common stock, payable in 2026:

Date of Declaration

Amount Payable per Share

Record Date

Date Payable

Aggregate Amount

(in millions)

$

$

$

$

$

$

Repurchased shares of our common stock are considered treasury stock. In December 2025 and 2024, our Board of Directors approved programs authorizing us to repurchase shares of our Class A common stock up to $14.0 billion and $12.0 billion, respectively. The program approved in 2025 became effective in March 2026, after the completion of the program approved in 2024. The timing and actual number of additional shares repurchased will depend on a variety of factors, including cash requirements to meet the operating needs of the business, legal requirements, as well as the share price and economic and market conditions. The following table summarizes our share repurchase authorizations and repurchase activity of our Class A common stock:

(in millions, except per share data)

Remaining authorization at December 31, 2025

$

Dollar-value of shares repurchased for the six months ended June 30, 2026

$

Remaining authorization at June 30, 2026

$

Shares repurchased for the six months ended June 30, 2026

Average price paid per share for the six months ended June 30, 2026

$

$

Note: Table may not sum due to rounding.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements in Part I, Item 1.